Big pay-TV operators including Comcast Corp. and Verizon Communications Inc.'s FiOS are taking steps to vastly expand their on-demand TV offerings. In doing so, they are edging toward turf occupied by online players like Netflix Inc., creating a tug of war over where people turn when they want to "binge" on a full season's worth of programming.

Consumers are watching less programming as it airs on TV and increasingly seeking on-demand entertainment. Netflix and some other online players have largely popularized binge-viewing, and pay-TV companies want to keep pace.

Comcast struck a deal to offer all episodes of some 21st Century Fox Inc. broadcast and cable shows on its on-demand service this season, people familiar with the matter say.

Bingeing Beyond Netflix

Details are being worked out, but among the contenders are the Fox network's "The Mindy Project" and FX network's "Justified." The content also will be available on mobile apps. Fox is planning similar partnerships with other pay-TV operators, a person familiar with the situation said.

Until now, Comcast and other pay-TV providers have generally offered four or five episodes of a current show on a rolling basis, with an older episode dropping off the on-demand menu as a new one is added. Under the new arrangement, every episode will be available after it airs all season.

Netflix—which has become a go-to service for viewers watching past seasons of series like AMC's "Breaking Bad"—contends that overexposure of shows through on-demand services will reduce their value before they become available to the streaming service when a season is over.

Ted Sarandos, chief content officer of Netflix, says the company has told TV content owners it won't be willing to pay them as much for their programming if they give full-season rights to pay-TV operators.

ENLARGE

Netflix has become a go-to service for viewers watching past seasons of series like AMC's 'Breaking Bad.'
AP

"The less exploited shows are through on-demand services, the more valuable they are to us," he said in an interview.

He said that as pay-TV operators try to keep themselves relevant in a world of binge-viewing, they are trying to "marginalize Netflix."

Comcast said it launched its on-demand service a decade ago and started offering recent episodes of many TV shows "when Netflix was only shipping DVDs by mail."

Now, the companies that supply TV programming must choose who to keep happy: Netflix and other online distributors—a source of fast revenue growth—or the traditional pay-TV distributors that are much bigger customers.

Two camps are emerging. Some content companies, like 21st Century Fox and NBCUniversal, are more willing to give expanded on-demand rights to pay-TV operators. (NBCUniversal is owned by Comcast, the largest pay-TV provider.) Others such as Walt Disney Co. and CBS Corp. are more reluctant. (21st Century Fox until June was part of the same media company as Wall Street Journal-owner News Corp.)

John Landgraf, chief executive of cable programmer FX Networks, which is owned by 21st Century Fox, said content owners should support traditional distributors, because the stability of the pay-TV industry depends on their continued success.

"Ultimately, if you look at where the bulk of investment for programming comes from, now and forever it will come from people who pay cable subscriptions," he said. Netflix is "freeloading" off the current distribution system, he said.

A Netflix spokesman disputed that assessment, saying the company invests more than $2 billion per year in content and its service helps build audiences for shows. Some Hollywood executives credit Netflix for making certain types of shows, like serialized dramas, more viable to produce.

Mr. Landgraf said there are significant downsides to Netflix relationships for content-owners. Netflix strips off the branding of channels when it airs their shows. And it takes out commercials, unlike on-demand services, which not only include ads but often disable the fast-forwarding feature, making that inventory more valuable to advertisers.

21st Century Fox views its expanded deals with pay-TV operators as a test, as it tries to determine the best way to appeal to consumers who want to binge on content, said a person familiar with the situation.

It isn't clear how much pay-TV operators are willing to pay to offer on-demand viewing of full-seasons of shows. FiOS's vice president of video strategy, Terry Denson, says he expects to get full current seasons on demand "at no incremental cost" if he is already paying a carriage fee for the TV channel.

Some pay-TV providers argue they shouldn't pay extra fees for the content because on-demand catch-up viewing can drive people to shows and boost ratings, helping the media companies. Free TV viewing through operators' on-demand services increased by more than 40% in 2012 from the year earlier, according to research firm Rentrak.

NBC's show "Grimm" is a case in point, Comcast said. Thanks to Comcast subscribers being able to catch up to the current season via on-demand, "Grimm" ratings jumped 58% last fall among those subscribers compared with the show's ratings across the whole pay-TV industry, the company said.

"You're seeing new audience and that's manifesting in higher ratings," said Matt Strauss, Comcast's senior vice president for digital and emerging platforms.

Other media companies are more cautious, not wanting to limit their flexibility to get the biggest streaming-rights payments possible from Netflix and Amazon.com Inc.

CBS last week renewed an agreement that gives Amazon exclusive rights to all episodes of the hit summer show "Under the Dome" four days after each episode airs on television. This summer, pay-TV operators could only offer a handful of recent episodes, while Amazon had the whole season.

In a statement, CBS said it's "in favor of all distribution methods that are incremental to the overall revenue picture."

With the new fall TV season getting into swing, Disney's ABC has given Netflix the exclusive right to carry all the previous seasons of certain serialized dramas like "Revenge" and "Scandal." Comcast's on-demand service has access to only a handful of those shows' previous episodes.

Verizon FiOS's Mr. Denson said the willingness to give too much great content to online players is shortsighted. "You're creating a beast that's going to come back and eat you," he said.

Mr. Landgraf said Netflix's efforts to convince content owners not to license their programming represents a radical shift in the industry's pecking order.

For years, he said, the companies that invested seed capital to create shows—major TV networks—have "rightfully" dictated terms to the companies running reruns, requiring, for example, that syndicators wait four years before running repeats every day of the week.

Now, he said, Netflix is the new syndicator of the digital era, but is trying to call the shots.

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